Costs for all types of medical plans are expected to increase by 9.9 percent in 2012, according to a survey by Buck Consultants, a division of Xerox.

This is the first time since 2001 that the survey has projected cost increases less than 10 percent for any type of plan, so a 9.9 percent increase can almost be seen as a victory. Employers are looking for ways to cut the rising cost of health insurance. Buck has been conducting its survey since 1999.

The numbers are consistent with projections for Iowa, though perhaps a little higher, according to research from David P. Lind Benchmark, a consulting firm in Clive.
Buck surveyed 129 insurers and administrators across the U.S. covering approximately 109 million people. The survey found costs are projected to increase more than a percentage point slower than the year before.

“The reduced trend factors reported in our survey reflect that health insurers, who may have previously added margins to account for health care reform benefit changes mandated for 2011, have now removed those margins for 2012 projections,” said Daniel Levin, FSA, a Buck principal and consulting actuary who directed the survey. “The reduction also reflects lower expected costs as a result of the economic slowdown. Employees are trying to reduce their out-of-pocket expenses and are postponing elective medical services.”

“Also, the trends are not varying by plan type as they have in previous surveys,” added Levin. “This may indicate that insurers do not currently see network type as a significant reason for modifying trend factors.”

Health insurers reported an average prescription drug trend of 9.6 percent. This is down 1.1 percent from the prior survey. It is also more than twice the 4.6 percent reported by pharmacy benefit managers (PBMs) — third party administrators of prescription drug programs who generally do not take any underwriting risk.

For plans that supplement Medicare, health insurers reported a projected increase of 5.8 percent excluding prescription drug coverage, up from 5.3 percent in the prior survey. This lower trend of Medicare Supplement plans reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and copays.

“Despite the lower trend factors found in our survey, health care costs continue to outpace both general inflation and wage increases — creating real business challenges for organizations,” said Levin. “We’ve seen increased interest from plan sponsors for strategies to optimize alternative delivery systems such as exchange models and Accountable Care Organizations.”